The Real Story: First-Quarter Report Card

In my debut column for TheStreet.com at the beginning of the year, I wrote: "The purpose of this column is to help you increase your investment returns by selectively going against the consensus."

I knew that contrarian picks would surely raise some eyebrows and touch some nerves, as some of the feedback proved (see below).

But I remain convinced that one of the best ways to make money in the market is to zig when others are zagging.

A review of the performance of my first-quarter stock picks bears this out. Over the past three months, I have recommended six longs and six shorts. In total and broken down into longs and shorts, they have beaten the S&P 500, as the accompanying table indicates.

(Results do not include Wednesday's long recommendation of Movado ( MOV), although the stock was up more than 3% early Friday after Jim Cramer echoed my bullish comments on "Mad Money" Thursday evening.)

Results are based on closing prices on the day the recommendation was made.

If you bought and sold every one of The Real Story's recommendations on the day they were made, you'd be sitting on a 2.6% gain vs. a 0.4% average gain if you bought or shorted the S&P 500 on those same days.

Keep in mind, The Real Story portfolio is a diverse group of stocks that includes technology, healthcare, retail, utilities, industrials, real estate, financials, restaurants and media. In my opinion there is less risk in that vs. simply owning the S&P 500, as the group is divided evenly between longs and shorts.

The long positions are up 4.2% vs. 1.6% if you bought the S&P on the same day as each of the various recommendations.

The shorts are in the black by 1.8%, even while the S&P has risen by 0.9%.

The Real Story So FarBeating the S&P, long and short

Stock

Story date

Recommendation

Last *

Profit

Percentage

LAMR

1/5

Short

52.40

-5.97

-12.9%

BJ

1/10

Short

31.69

-1.99

-6.7%

APPX

1/19

Short

28.25

9.18

24.5% closed 3/9/06

PFCB

1/25

Short

48.83

1.46

2.9%

WBS

1/31

Buy

48.49

1.39

3.0%

ENMC

2/8

Buy

5.15

-0.55

-9.6%

SUNW

2/15

Buy

5.15

0.83

19.2%

ADBE

2/27

Short

36.33

2.86

7.3% closed 3/23/06

ELN

3/6

Buy

14.76

2.06

16.2%

SCG

3/10

Buy

39.51

-0.56

-1.4%

BOOM

3/14

Buy

35.77

2.83

8.6%

JOE

3/23

Short

61.75

-0.80

-1.8%

Real Story Portfolio

2.6%

* as of close 3/30 Source: Thomson Financial

The biggest winner was a recommended short of American Pharmaceutical Partners ( APPX) on Jan. 19. The position was closed on March 9 for a 24.5% gain. We also currently have a 21.5% winner in Sun Microsystems ( SUNW). I'm still looking for a $6 price target on Sun. Investors are also looking at double-digit gains in Elan ( ELN), while Dynamic Materials ( BOOM) is up over 9%.

On the flip side, Lamar Advertising ( LAMR) and BJ's Wholesale Club ( BJ) just won't roll over and die. These stocks are up 12.3% and 6.2%. Nevertheless, I continue to be bearish. Encore Medical ( ENMC) is also looking at an 8.8% loss, although I still believe in the orthopedics company.

Feedback Loop

One of the truly enjoyable aspects of writing for TheStreet.com is interacting with readers. Sure, I get called the occasional unprintable name now and then (and if you're going to attack me personally, at least be brave enough to include a real email address so I can respond). But for the most part, the emails are well thought-out. Most of the critical feedback contains rational arguments against my position. I usually don't agree, but I can still appreciate the other point of view.

For example, my recent story on St. Joe ( JOE) unleashed an avalanche of email.

A.H. wrote in, agreeing with my bearish stance:

Nothing is moving in the Panhandle. We own a significant amount of land in the Panhandle and I know firsthand that the real estate market is dead. Lots of sellers. No bidders. The area is one hurricane away from flatlining. No amount of hype from the JOE marketing machine can change the fundamentals in the Panhandle right now. There's little hope JOE will meet its full-year guidance. JOE will see $50 before $70.

However, the majority of emailers were not on board with my thesis.

Leon of Panama City, Fla., wrote:

Read your trashing of St. Joe today, and while it read well, I have to ask: Have you spent much time in the region?

I have extensive land holdings here in Bay County. Naturally I am surrounded by St. Joe land and am influenced by everything that they do. I own a lot of its stock; been accumulating it for the last eight years. I intend to hold it for a long time.

JOE does a first-class job of creating value ... and that is what this company is about. Its current market cap is very low considering the true value of its assets. It is a unique company, even though constantly compared to homebuilders.

Thanks for reading this. Be careful about suggesting shorting this stock. This stock is all about Florida, which you seem not to understand too well.

Mike took issue with the bias of the article:

I would like to buy some swampland that you are selling. Not a very balanced article, but then again I have not seen much balance from journalists lately.

I reminded Mike that I am not reporting. I am a columnist expressing an opinion. While I do loads of research to ensure that my facts and statements are accurate, if I believe a stock is a dog or a gem, I'm going to shout it from the rooftops.

Rob chimed in with:

You are a typical out-of-area (Jersey?) pundit with both a short-term and distantly myopic view of the current reality and future potential of JOE.

Investors buy stocks with holding periods of more than a few weeks or months in mind. In-print "traders" like you are a major reason much of the general public view their purchase of stocks as a volatile form of gambling requiring an attention span of days or weeks, or refrain from investing in stocks at all, fearing manipulation by the "fast buck" crowd.

His argument about being short-term is ridiculous. The reason real estate in northwest Florida and many other regions has been so hot is that short-termers are flipping their properties. My bearish stance on St. Joe is because I am taking a longer-term view of the company. The fact that St. Joe is dumping property is not a good sign for the long-term health of its markets. I don't like the stock, but management is anything but dumb. If it thought prices were going to continue to rise, I'm not sure it would be selling as much land as it is. Blind allegiance to a stock or company is what is irrational.

And finally, this five-word analysis from an anonymous emailer: "Written by a true Yankee."

While it's true that I bleed navy blue pinstripes, Anonymous should know that I saw Johnny Cash in concert years ago, once won a karaoke contest singing "You Never Even Called Me By My Name" by David Allan Coe, love pecan pie and, by the way, currently live in Florida -- on a swamp (but we prefer to call it a "preserve").

Y'all come back now. Y'hear?

As originally published, this story contained an error. Please see Corrections and Clarifications.

In keeping with TSC's editorial policy, Lichtenfeld doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships.

Marc Lichtenfeld was previously an analyst at Avalon Research Group and The Weiss Group and a trader at Carlin Equities. He holds NASD 86,87, 7 and 63 licenses. His prior journalism experience includes being a reporter/anchor for On24 in San Francisco and a managing editor of InvestorsObserver, a personal finance Web site. He is a graduate of the State University of New York at Albany. He appreciates your feedback; click here to send him an email.